Meng Wanzhou’s freedom inspires overhaul of US state capitalism

Meng Wanzhou, Chief Financial Officer of Huawei, reads a statement before the Supreme Court of British Columbia in Vancouver, Canada, September 24, 2021. / VCG

Meng Wanzhou, Chief Financial Officer of Huawei, reads a statement before the Supreme Court of British Columbia in Vancouver, Canada, September 24, 2021. / VCG

Editor’s Note: Huang Yongfu is an economic affairs commentator. After obtaining a doctorate, he began his career at the University of Cambridge, then moved to the United Nations system. He is the author of numerous articles and books related to economics. His current interests are in global development and Sino-US ties, especially trade, finance and technology issues. He can be contacted via [email protected] The article reflects the views of the author and not necessarily those of CGTN.

The release of Huawei’s chief financial officer, Meng Wanzhou, came as a surprise, which removed a source of tension between Beijing and the West. However, the company could continue to face charges, as US Secretary of Commerce Gina Raimondo said on September 24 that the Joe Biden administration would continue its efforts to prevent Huawei from obtaining much needed advanced chips.

Global opinions should be shaped in such a way as to thwart the wayward, assertive and extremely destructive behaviors of America as a unique superpower without rules.

Meng’s hostage incident was part of US sanctions against Huawei, poking fun at Western liberalism and free market competition. As part of an “industrial policy” for designated industries deemed strategically important, US state capitalism embraces state surveillance and intervention to attack “foreign adversaries” through sanctions or to stimulate industries through sanctions. through grants or increased funding.

By declaring a “national security risk” or “human rights violations,” America has aggressively deployed a massive militarization of economic tools aimed at slowing China’s technological advance to a level systemic. Steps have been taken to block sensitive technologies against China behind tariff barriers, import and export controls, subsidies and stricter investment screening rules, which the US-China trade war had brought about. already driven.

As China’s largest high-tech company and one of the world’s largest telecom equipment manufacturers, producing premium and cost-effective products, Huawei holds a dominant role in 5G technologies with many crucial patents on lightning-fast 5G mobile networks. Huawei represents a technological challenge for the American hard power essential to achieve superiority in the military field. America has launched a barrage of actions to cripple Huawei, on the grounds that its smartphones and network equipment could be Trojans for Chinese spies that threaten Western interests.

Regarding import controls, the US Department of Commerce has proposed policies to prevent imports of any new technology deemed to be related to a “foreign adversary”, covering chips and data services. The United States has also urged its allies to stop using equipment in their 5G networks based on Huawei 5G standards and technologies that are part of China’s Belt and Road Initiative. The most recent case is that of the United States on July 9, 2021, blacklisting a series of Chinese tech companies with limited imports due to human rights violations in the Xinjiang Uyghur Autonomous Region.

A Huawei 5G mobile phone tests its speed at the Huawei 5G Innovation and Experience Center in London, Jan. 28, 2020. / Xinhua

A Huawei 5G mobile phone tests its speed at the Huawei 5G Innovation and Experience Center in London, Jan. 28, 2020. / Xinhua

Regarding export controls, the US Department of Commerce in February 2020 amended the so-called foreign direct products rule, which restricts a list of emerging technologies sold to China and other countries for military products. or national security. By the end of last year, America had added more than 300 Chinese companies to an “entity blacklist,” which prevents American companies from exporting critical or sensitive technologies to them because of a “threat to national security “. The most famous is that Huawei was subjected to it in 2019. Almost all component and software exports to Huawei in particular, and China in general, would require export licenses.

Growing sharply in the United States and Europe, state grants have been the largest in a range of government interventions to direct resources to industries critical to their national interests, from 5G wireless technology to new generation in the manufacture of chips and batteries for electric cars. pharmaceuticals.

Investing in innovation and manufacturing is another area the U.S. government is actively working on, as evidenced by the U.S. Innovation and Competition Act 2021 passed by the Senate in June, with several specific provisions intended to counter “Chinese influence at national and international level”. It includes increased funding for the National Science Foundation and stricter measures to increase the diversity of STEM (science, technology, engineering and mathematics) education and research activities.

No longer satisfied with the financial support for research, the White House in May 2021 even proposed a toolkit to move production from four sectors deemed vital for the supply chain from China to the United States, in using populist rhetoric to bring back millions of manufacturing jobs. It is perfectly possible for America to do more manufacturing itself, but that is not advisable with higher prices and reduced demand. According to the theory of comparative advantage advanced by David Ricardo, nations prosper when they specialize in the things they do best and engage in trade. The United States would improve if it focused on its own strengths as a nation and allowed the two nations to trade freely.

The essence of capitalism is the property of private property. Free market capitalism is the very foundation of the civilized order where people can produce goods and services and sell them to those in need on the basis of the principle of comparative advantage. A wave of profit maximization and unhindered entrepreneurship is pursued as long as personal and property rights are respected, according to Adam Smith’s 1759 book “The Theory of Moral Sentiments”.

US state capitalism could help companies maintain market share, but it blocks the free flow of goods and ideas across borders. The world is already deeply interconnected and integrated. Job creation and prosperity can be achieved through technological cooperation and increasing the capacity of a market economy based on the principle of comparative advantage, and not through protectionist policies. What we need are laws that encourage competition by leveling the playing field rather than hindering it, and a society that understands that capitalism and freedom go hand in hand.

With Meng’s release, it makes sense for the Biden administration to reverse the continuing battle over technology, avoid antagonism against China, and focus on meaningful interactions and cooperation in areas such as climate change and trade. .

(If you would like to contribute and have specific expertise, please contact us at [email protected])

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Christopher Easley

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